[March 4, 2005]

Battle of the VoIP-Call-Blocking Telecoms Round 2: Justice Catches Up With Blocker

BY JOHANNE TORRES

The Federal Communications Commission (FCC) demanded Madison River Communication, a Mebane, North Carolina-based telecom, to halt deliberate blockage of VoIP-based calling traffic this week, and imposed a $15,000 fine to be paid to the government. The telecom runs a number of phone companies in rural areas in the southeastern and midwestern United States.

This week’s issue was brought up to the FCC last month, when Internet-based telephone service provider Vonage Holdings Corp. said it discovered that some of its phone calls are being blocked by an undisclosed major telecom, causing a reported disruption of service for over two hundred customers. Several online news reports have named Madison River Communication as the former “undisclosed” telecom who carried out such iniquitous practices.

Back in September last year, Kansas City, MO-based Nuvio Corporation (news – alert), a VoIP services provider filed an ex-parte letter with the Commission to address and combat potential discriminatory practices by broadband providers. Nuvio claimed that broadband Internet access providers, who also offer VoIP services, have economic incentives to discriminate against unaffiliated VoIP providers in favor of affiliated providers. The startup claims that its customers’ calls have been affected by at least one cable operator that features VoIP-based services as part of its offering.

"Broadband providers have nothing to lose and everything to gain from degrading the connection quality of their customers who are using unaffiliated VoIP providers," said Jason Talley, president and CEO of Nuvio Corporation last September. "The few customers they lose from discrimination is drastically offset by the substantial increase in its VoIP subscribers, market share and revenues from the practice,” he added.

The FCC released an official statement yesterday with Chairman Michael Powell saying: "We saw a problem, and we acted swiftly to ensure that Internet voice service remains a viable option for consumers." FCC’s ruling will keep the telecom from practicing blockage of VoIP-based calling traffic at least until late 2007.